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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): JANUARY 23, 1998
THE MEAD CORPORATION
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
OHIO 1-2267 31-0535759
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
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MEAD WORLD HEADQUARTERS, COURTHOUSE PLAZA N.E., DAYTON, OHIO 45463
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (937) 495-6323
NOT APPLICABLE
(Former name or former address, if changed since last report)
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Item 5. Other Events
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On January 23, 1998, the Registrant issued the press release attached
hereto as Exhibit 20.1 reporting certain financial results for the year and
quarter ended December 31, 1997.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE MEAD CORPORATION
February 10, 1998 By: /s/ Gregory T. Geswein
------------------------------------
Gregory T. Geswein
Vice President and Controller
2
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EXHIBIT INDEX
Exhibit No. Description
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20.1 Press Release issued by The Mead Corporation on
January 23, 1998
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Exhibit 20.1
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MEAD LOGO
- --------------------------------------------------------------------------------
Corporate Communications Department
World Headquarters
Courthouse Plaza Northeast
Dayton, Ohio 45463
937-495-6323
NEWS
MEAD REPORTS YEAR-END AND FOURTH-QUARTER RESULTS
DAYTON, Ohio. January 23, 1998 -- The Mead Corporation today reported fourth
quarter net earnings of $31.8 million, or 30 cents per share (diluted), compared
to 1996 fourth quarter net earnings of $29.2 million, or 28 cents per share.
Fourth quarter sales were $1.24 billion, compared to $1.15 billion in 1996.
Full-year net earnings were $150.1 million, or $1.41 per share (diluted),
compared to $195.3 million, or $1.84 per share, in 1996. 1996 net earnings
included a five-cent gain from the sale of a discontinued business. Net sales
for the year were $5.08 billion, compared to $4.71 billion in 1996.
"While difficult markets and weaker pricing clearly affected the industry
and Mead's earnings in 1997, we benefited from our strong mix of businesses and
our continued emphasis on productivity," said Jerome F. Tatar, chairman, CEO
and president.
Paper
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Segment sales and earnings improved for both the fourth quarter and the
full year, reflecting the acquisition of the Rumford, Maine, mill in late 1996.
The Publishing Paper Division achieved record full-year shipments and
production at both the Escanaba, Michigan, and Rumford mills. Sales for the
year surpassed 1996 levels while earnings were up slightly. Fourth-quarter
results improved over the prior-year quarter with higher sales volume and
slightly higher pricing. Within the Fine Paper Division, fourth-quarter sales
and earnings were off slightly on lower shipments. For the year, division sales
and earnings were likewise down slightly from 1996. However, productivity
improvements helped offset the impact of lower shipments and selling prices.
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Improvement in Mead's specialty paper businesses was driven by Mead's
Specialty Paper Division, which achieved improvements in sales and earnings for
both the fourth quarter and the full year based on strong results in all of the
division's strategic grades.
Packaging and Paperboard
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Sales and earnings for the segment improved in the fourth quarter
compared to the prior-year period on stronger results from the Coated Board,
Packaging and Containerboard divisions. Full-year earnings declined when
compared to the prior year as a result of weaker pricing during much of 1997 for
corrugating medium. Within Mead's Coated Board System, sales and earnings
improved for both the fourth quarter and the year on higher worldwide sales
volume, strong results in related sawmill operations and improved operating
efficiencies at the Mahrt mill in Alabama and the Packaging Division's
converting operations. Packaging sales growth was strong in North America,
Europe and Latin America. Open market board sales volume improved in North
America and Europe. Improved performance more than offset the negative impact of
foreign exchange rates, primarily in Europe.
Fourth-quarter sales and operating results improved within the
Containerboard Division on stronger pricing and increased sales volume.
Full-year sales increased over 1996 based on production from the new corrugating
medium machine at the division's Stevenson, Alabama, mill. Operating results for
the year declined from 1996 as a result of lower prices during much of the year.
During April, the #2 machine at the Stevenson mill will be down for a scheduled
17-day period to facilitate completion of its previously announced capacity
expansion and environmental upgrade.
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Distribution and School and Office Products
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Full-year segment sales and earnings declined as did fourth-quarter
operating results. However, sales in the fourth quarter improved compared to the
prior year as Zellerbach continued to strengthen its sales organization.
Zellerbach's results declined for the quarter and significantly for the year on
lower margins, higher selling costs and costs related to the division's
performance improvement efforts.
Within the School and Office Products Division, sales and operating
results improved for the fourth quarter when compared to 1996. The division
experienced a normal seasonal loss during the quarter following a successful
back-to-school season. Full-year sales were up and earnings were about even with
the prior year. The division's Canadian operations, Hilroy, achieved record
sales and higher earnings for the year.
Northwood Investees
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For the quarter, earnings from Mead's jointly owned Northwood companies
were below those of the prior year due to significantly lower lumber prices and
reduced shipments. Full-year results improved slightly from 1996 as higher pulp
mill demand and record production were offset by increased log costs and lower
prices for oriented structural board. During the quarter, Northwood announced a
performance improvement program to reduce costs and improve operating margins.
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Other
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A previously announced two-for-one stock split was effective December 1.
On a post-split basis, Mead repurchased 880,000 outstanding shares during the
quarter and 2.1 million shares during 1997. The company has repurchased more
than 60 percent of the shares under its continuing 10 million share repurchase
authorization of April, 1995.
The Mead Corporation produces coated papers for periodicals, catalogs,
books, and commercial printing; carbonless copy paper; uncoated and specialty
papers; and pulp and wood products. In the packaging and paperboard sector, the
company produces coated paperboard; beverage and food packaging; and corrugating
medium and cartons. Mead is a major supplier of value-added school and office
products. Mead's Zellerbach division delivers products and services for
printing, packaging and industrial supply markets.
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STATEMENT OF EARNINGS
(All dollar amounts in millions, except per share amounts)
Fourth Qtr Ended Full Year Ended
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Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1997 1996 1997 1996
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Net sales $ 1,243.8 $ 1,149.7 $ 5,077.4 $ 4,706.5
Cost of products sold 1,0l3.7 945.2 4,177.3 3,803.9
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Gross profit 230.1 204.5 900.1 902.6
Selling & administrative
expenses 161.2 147.6 589.3 564.0
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Earnings from operations 68.9 56.9 310.8 338.6
Other revenues 5.4 2.2 9.9 13.7
Interest & debt expense (24.3) (17.4) (98.2) (57.7)
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Earnings from continuing
operations before
income taxes 50.0 41.7 222.5 294.6
Income taxes 18.2 16.3 81.3 109.0
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Earnings from continuing
operations before
equity in net earnings
of investees 31.8 25.4 141.2 185.6
Equity in net earnings
of investees 3.8 8.9 4.3
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Earnings from continuing
operations 31.8 29.2 150.1 189.9
Discontinued operations 5.4
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Net earnings 31.8 $ 29.2 $ 150.1 $ 195.3
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Earnings per common share - basic:
Continuing operations $ .31 $ .28 $ 1.44 $ 1.81
Discontinued operations .05
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Net earnings - basic $ .31 $ . 28 $ 1.44 $ 1.86
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Earnings per common share - diluted:
Continuing operations $ .30 $ .28 $ 1.41 $ 1.79
Discontinued operations .05
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Net earnings - diluted $ .30 $ .28 $ 1.41 $ 1.84
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Cash dividends per
common share $ .16 $ .15 $ .61 $ .59
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Average common
shares outstanding
(millions) - diluted 106.0 106.0 106.4 106.4
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BALANCE SHEETS
(All dollar amounts in millions)
Dec. 31, Dec. 31,
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1997 1996
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Current assets:
Cash and cash equivalents $ 29.5 $ 20.6
Accounts receivable 586.1 578.2
Inventories 524.5 509.3
Other current assets 77.5 81.2
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Total current assets: 1,217.6 1,189.3
Investments and other assets:
Investees 151.1 154.9
Other assets 551.2 521.3
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702.3 676.2
Property, plant and equipment - net 3,309.8 3,120.4
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Total assets $ 5,229.7 $ 4,985.9
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Current liabilities:
Accounts payable $ 330.4 $ 358.9
Accrued liabilities 382.6 383.7
Current maturities of long-term debt 1.8 15.1
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Total current liabilities 714.8 757.7
Long-term debt 1,428.0 1,239.7
Commitments and contingent liabilities
Deferred items 798.4 742.1
Shareowners' equity:
Common shares 154.9 155.5
Additional paid-in capital 53.5 13.2
Foreign currency translation adjustment (20.5) (2.4)
Retained earnings 2,100.6 2,080.1
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2,288.5 2,246.4
Total liabilities and shareowners'
equity $ 5,229.7 $ 4,985.9
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SALES AND EARNINGS SEGMENT INFORMATION
(All dollar amounts in millions)
Fourth Qtr Ended Full Year Ended
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Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1997 1996 1997 1996
Industry Segment Sales
to Unaffiliated Customers:
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Paper $ 392.7 $ 375.7 $ 1,576.1 $1,251.3
Packaging and Paperboard 368.7 325.7 1,431.8 1,371.4
Distribution and School
and Office Products 482.4 448.3 2,069.5 2,083.8
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TOTAL NET SALES $1,243.8 $1,149.7 $ 5,077.4 $4,706.5
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Fourth Qtr Ended Full Year Ended
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Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1997 1996 1997 1996
Industry Segment Earnings
from Operations:
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Paper $ 53.4 $ 51.5 $ 194.5 $ 193.8
Packaging and Paperboard 35.5 20.2 129.6 138.6
Distribution and School
and Office Products (4.9) (.7) 38.7 69.3
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84.0 71.0 362.8 401.7
Other revenue
- corporate 6.4 2.7 l3.0 l0.7
General corporate expense (16.1) (14.6) (55.1) (60.1)
Interest and debt
expense (24.3) (17.4) (98.2) (57.7)
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Total corporate and
other (34.0) (29.3) (140.3) (107.1)
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EARNINGS FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES $ 50.0 $ 41.7 $ 222.5 $ 294.6
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STATEMENT OF CASH FLOWS
(All dollar amounts in millions)
Year Ended
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Dec. 31, Dec. 31,
1997 1996
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Cash flows from operating activities:
Net earnings $ 150.1 $ 195.3
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation, amortization and
depletion of property, plant and
equipment 242.3 203.0
Depreciation and amortization
of other assets 46.2 47.4
Deferred income taxes 37.2 54.2
Investees - earnings and dividends 1.3 7.1
Discontinued operations (5.4)
Other (20.8) (16.2)
Change in assets and liabilities, excluding
effects of acquisitions and dispositions:
Accounts receivable (7.9) 49.0
Inventories (15.2) (25.8)
Other current assets 1.3 6.6
Accounts payable and accrued liabilities (29.6) (49.2)
Cash (used in) discontinued operations (40.5)
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Net cash provided by operating activities: 404.9 425.5
Cash flows from investing activities:
Capital expenditures (440.7) (433.4)
Additions to equipment rented to others (33.7) (40.6)
Payment for acquired business (640.4)
Proceeds from sale of business 19.6
Other (4.0) 19.2
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Net cash (used in) investing activities (478.4) (1,075.6)
Cash flows from financing activities:
Additional borrowings 719.5 561.1
Payments on borrowings (547.2) (75.5)
Cash dividends paid (63.8) (61.9)
Common shares issued 43.8 14.3
Common shares purchased (69.9) (59.9)
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Net cash provided by financing
activities 82.4 378.1
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Increase (decrease) in cash and
cash equivalents 8.9 (272.0)
Cash and cash equivalents at beginning
of year 20.6 292.6
Cash and cash equivalents at end of year $ 29.5 $ 20.6
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